There are 3 important steps you need to complete before starting the settlement/negotiation process with your creditors.
First, you need to set up a separate settlement account at your bank. This checking account will be used to hold only settlement funds and will keep a separation so you aren’t tempted to spend these funds.
IMPORTANT NOTE: You will want to move all your accounts to a new bank if you have credit accounts you plan to settle with that company.
Second, you will want to be able to receive faxes, as fax is still the standard method of sending and receiving documents in the industry. Settlements are very time sensitive and there is often no time for a creditor to mail you a settlement offer. There are several great electronic fax services which give you a dedicated number and then email the fax to you as an attachment.
Third, you need to set up a creditor call screening system. Creditors and collection agencies use automated dialing systems that will call you 20-30 times per day. If you have 10 accounts, this can mean 200-300 calls per day! That is enough to drive anyone crazy.
If the creditor has your home phone as their point of contact, you will want to purchase a call interceptor device to use in conjunction with caller ID and digital voicemail. This device will send creditor calls straight to voicemail so the phone won’t even ring. You can then check the messages at your leisure.
If the creditor has your cell phone as their point of contact, you will want to purchase a prepaid cell phone and give them that number. Then, turn off the ringer on that phone! If they continue to call your main cell phone afterwards, you may have to change the number.
With either method, you will want to keep a call log. This log should contain fields for date, time, creditor, which account (if you have multiple with one creditor), rep name and notes. We will discuss how to use this call log later.
One thing that has been popularized by debt settlement companies that you should NOT use is the cease and desist letter. This letter basically tells your creditors to stop calling you. While it used to work well several years ago, it is now another red flag for the creditors that you are working with a professional company.
